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From process driver to P&L: Making SAP mean “Sweeping Awesome Profits” for your company

by Michael Doane

December 7, 2010

Improving P&L results is the bulls-eye of business, but one of the misfortunes for many clients of SAP is a perceived inability to derive measurable value from their investments. Software is acquired and implemented, and, after a period of shakeout and stabilization, it is declared that “things are better” -- an intangible and subjective conclusion that does nothing whatsoever to placate shareholders asking what they got for their investments.

The problem is that the market stubbornly presumes that SAP is solely an IT subject, with software at the core. CEOs regularly refer to their acquisitions of SAP as “technology upgrades”. And while business stakeholders participate in implementation projects, they usually fall back into a passive role shortly after business blueprint, leaving IT to mind the SAP store. Note these most frequent mistakes with long-term repercussions, as cited by 100 clients:

One of the key reasons for mistakes A, B, and D is a debilitating and simplistic notion of adherence to implementation time & budget. The failure to balance measurable benefit against implementation project outlays pushes cost-obsessed firms to rush the job, to the detriment of realized benefit as well as to the time required to gain sufficient knowledge transfer. Mistake C provides clear evidence that firms view SAP as the domain of information technology rather than of business.

Software is not an answer to a business question. It is a variable in an algorithm that can lead to an answer.

Further, the answer can only be properly expressed in numbers, not prose.

For those clients who think SAP means Send Another Payment, it is time to change the acronym’s meaning to Sweeping Awesome Profits by following this updated value chain:

The value chain begins where few clients would normally expect it: the end users. One of the problems is the label applied to these people.

Only two industries call their ultimate clients users, and one of those industries is illegal.

Further, while directors, managers, and supervisors believe they are the drivers of business processes, they are not. It is the end users (heretofore known as process drivers) wh
o actually perform the SAP business functions that drive and fulfill business process.

This driving is enabled by the engine of SAP applications software. Most firms tend to tinker endlessly with that software while failing to get the car onto the superhighway of business process fulfillment. Projects such as consolidation, extended applications, and technical upgrades improve the engine, but often without adding much to any measurable business benefit.

With end users/process drivers at the wheel, business process owners and other business stakeholders should be navigating their way to cost reductions, revenue enhancements, improved client satisfaction, and other business results that are essential to a thriving P&L. Such results can be achieved through continuous business process improvement.

In order to properly navigate to these improvements, business needs some form of dashboard, preferably at the KPI level. Although no one would drive a car without a windshield and dashboard, the majority of SAP clients drive their business processes without tangible measurement of actual performance or credible targets. For such firms, business process improvement is not given its rightful place as an obvious priority and only incremental gains are made. With this focus, an order-to-assemble firm that is paid a bonus for early deliver should be totally focused on every activity in the Order Fulfillment Turnaround process. Printing firms with thin sales margins should be laser-like in their measurements of paper costs and waste.

Key notes:

If you are not measuring the key elements of your major business processes, your business decisions are really just best guesses.

1. Begin by re-branding users to process drivers and provide them the necessary support to better fulfill those processes.

2. Keep the SAP engine in tune, but don’t over-obsess about its performance.

3. Improve your business processes on a continual basis. Otherwise you are doing a great job of standing still.

4. Improve your P&L through navigation that is based on key performance indicators rather simply senior management “vision”.

Enjoy the Sweeping Awesome Profits.

Want to learn more and ask me your specific questions? Join me for a Live Q&A next Thursday, December 16 from 12-1pm ET to discuss SAP solution maturity, value realization, cost reduction and best practices to help you thrive after you go live.